Five Things You Should Know About Car Insurance
Statistics show that a majority of the people end up paying more for auto insurance than is required. More often than not, the culprit is a lack of knowledge as people tend to be intimidated by the complicated jargon surrounding auto insurance. As opposed to popular belief, auto insurance is a relatively easy concept to understand, especially when broken into simple elements. Here are a few things you must know before you start looking for car insurance.
1. How are insurance rates calculated?
While calculating the insurance rate, an insurance providing company considers these two primary factors: rating and underwriting. Every applicant is assigned an underwriting category according to the risk associated with him or her. Depending on this estimate, the company prefigures the extent of financial responsibility in the wake of an accident. At the same time, every insurance provider runs a thorough check on the applicant to gather information about claim frequency. If you have made a high number of claims on your earlier auto insurance policies, you are likely to be charged a higher insurance rate.
2. What other factors affect the insurance rate?
Insurance rates are affected by both driving and non-driving factors. The kind of car you are driving, how old it is, and your driving record all influence what you will pay. Non-driving factors like your age, sex, marital status and geographical location also play a crucial role in determining your insurance rate. For example, unmarried men usually pay higher insurance rates than married men.
3. What system does your state follow – Tort or No-Fault?
Every state follows one of two insurance systems: Tort or No Fault. As the name suggests, insurance policies under a No-Fault system are not concerned about finding the guilty party in an accident. The damages are paid irrespective of who is at fault. Under the tort system, the person at fault in an accident is supposed to pay a part of the damages. This usually leads to long legal battles, hence, you might have to wait a long time before you get financial compensation. In the no-fault system, you get immediate compensation, but you forego your rights to sue the guilty driver.
4. What are the different kinds of coverage offered in standard auto insurance policies?
A basic insurance plan offers liability coverage which includes bodily injury liability insurance, property damage liability insurance and uninsured motorist insurance. This coverage comes into play in case of any medical injuries or damage caused due to an accident where the policy holder is at fault. Additionally, it also covers legal costs if the case goes to trial.
Besides this, there are other forms of coverage like collision coverage, comprehensive coverage and medical coverage, all of which are optional. Collision coverage kicks in if your car collides with a stationary object like a tree while comprehensive coverage is meant for damage caused outside of accidents like theft, floods etc.
5. How to find the perfect auto insurance policy?
Once you are equipped with the basic information about auto insurance, you can start looking for ideal policies for yourself. The internet is a great place to acquire quotations from different insurance providers. Because many major insurance companies do not operate in every state, you can use this unique insurance research site to search for car insurance companies by state: http://www.iseecars.com/car-insurance-companies.
Depending on your needs and priorities, you can choose from among the various options available to you. As a final word of advice, read your policy carefully and don’t hesitate to ask for discounts.